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European markets set to fall at the open, reversing positive trend

Soegeefx AppsEU MarketEuropean markets set to fall at the open, reversing positive trend

Holly Ellyatt

European stocks are heading for a lower open on Wednesday, bucking a positive trend seen in the previous session.

The declines expected on Wednesday come after European markets rallied yesterday, with the pan-European Stoxx 600 closing 3% higher. Travel and leisure stocks jumped 6.1% to lead gains as all sectors and major bourses entered positive territory.

Overnight in Asia-Pacific markets, shares traded higher after U.S. stocks rallied for a second day Tuesday.

The two straight days of gains came on the back of a pullback in bond yields, with the 10-year Treasury yield falling below 3.6% at one point after topping 4% briefly last week.

A weakening in the most recent job openings data had prompted some investors to consider whether the Federal Reserve would slow the pace of interest rate hikes.

More German companies planning price increases, Ifo Institute says

More German companies are planning to hike prices in the coming month, according to a new Ifo Institute survey published Wednesday.

Price expectations across the whole economy for the coming month hit 53.5 points in September, up from a seasonally-adjusted 48.1 in August. The food price indicator stood at a full 100 points, up from 96.9 in August.

“Unfortunately, this probably means the wave of inflation isn’t about to subside,” says Timo Wollmershäuser, head of forecasts at Ifo.

“Especially when it comes to gas and electricity, the price pipeline is not yet exhausted.”

– Elliot Smith

CNBC Pro: Bank of America reveals its global picks for this quarter, giving one stock over 100% upside

Interest rate rises, soaring energy prices and political turmoil in some parts of the world have battered stocks going into the final quarter of this year.

To help investors navigate the volatility, Bank of America has revealed its top “short-term stock recommendations” for the next quarter, which they expect to “significantly outperform” their peers.

— Ganesh Rao

Dollar index falls back to 110

One factor helping equity markets on Tuesday could be a slightly weaker dollar, which is falling for the fifth-straight day.

The DXY US Dollar Currency Index was down 1.5% in afternoon trading at 110.06. The index was trading as high as 114.78 last week, when there was concern about a failure of the UK government bond market.

Dollar index retreats from highs Chart

The British pound and the euro were each more than 1% against the dollar on Tuesday. The greenback was also down against the Japanese yen.

—Jesse Pound, Gina Francolla

CNBC Pro: Market is heading toward the ‘best week of the year,’ pro says — and names 2 stocks to play it

Market veteran Phil Blancato, whose firm has more than $4 billion in assets under management, said he expects next week to be a “turnaround week” for markets.

Investors should take the chance to “jump into the market,” he said, as he named two stocks to take advantage of the rally ahead.

— Zavier Ong

Stifel’s Barry Bannister says there is “room for a rally” after two straight days of gains

Stifel chief equity strategist Barry Bannister said stocks can advance further after this week’s sharp two-day rally.

“I don’t think you have to worry about a recession until the second half of ’23,” Stifel chief equity strategist Barry Bannister said Tuesday on CNBC’s “Closing Bell: Overtime.” “So there is room for a rally as you go into the early part of next year.”

The strategist said there could be a “conditional pause” at the December meeting as the Federal Reserve reviews the impact of its interest rate hiking plan on inflation.

“Inflation leading indicators are all falling, global liquidity has tightened quite a bit. They don’t want to kill the patient to cure the disease,” Bannister said. “And if the data kept going their way, then the pause would last, and if the data don’t go their way, they would hike again and we would go right back down.”

— Sarah Min

CNBC Pro: This isn’t the market bottom, Morgan Stanley says, naming 3 things that have to happen first

There’s unlikely to be a sustainable market bottom unless three conditions are met, according to Morgan Stanley.

“We … remind readers that the last few innings of every bear market are very challenging to trade as volatility becomes extreme,” they wrote. “None of the conditions we have been looking for to call an end to this bear market are in place.”

— Weizhen Tan

European markets: Here are the opening calls

European stocks are heading for a lower open on Wednesday, bucking a positive trend seen in the previous session.

The U.K.’s FTSE index is expected to open 27 points lower at 7,059, Germany’s DAX 59 points lower at 12,606, France’s CAC 40 down 25 points at 6,005 and Italy’s FTSE MIB 112 points lower at 21,426, according to data from IG.

The declines expected on Wednesday come after European markets rallied yesterday, with the pan-European Stoxx 600 closing 3% higher. Travel and leisure stocks jumped 6.1% to lead gains as all sectors and major bourses entered positive territory.

The British pound rose Tuesday after the U.K. government’s dramatic policy U-turn and the yields on Britain’s sovereign bonds also dipped lower after a heavy sell-off last week.

Data releases on Wednesday include final euro zone PMI data for September and German import and export data for August. Earnings come from Tesco and Bang & Olufsen.

— Holly Ellyatt

Source : CNBC

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